The US economy gave positive signals for the currency and investors believe that the Fed will cut rates by 25 basis points.
He global dollar rose on Friday after data showed that a key measure of inflation was in line with forecasts, while personal spending and income rose, supporting expectations that the United States Federal Reserve (Fed) will likely cut interest rates by about 25 basis points next month, while the greenback closed the month higher in Uruguay.
He dollar index, The index, a gauge of its value against six major peers, rose to a 10-day high after the inflation data and was up 0.3% at 101.7 units. For the week, it rose 1%, its best weekly performance since early April. This month, however, the index fell 2.6%, its weakest level since November last year.
He dollar rose 0.8% to 146.09 yen following the inflation data, its biggest daily gain in two weeks. It rose 1.2% on the week, on track for its biggest weekly gain since mid-June. But it remained down 2.6% in August, falling for a second straight month against the Japanese currency.
The expectation is on the Fed
Futures of interest rates USA Friday’s forecasts imply a 31% chance of a 50-basis-point rate cut next month, down from Thursday’s 35% chance, LSEG calculations showed, with the market fully pricing in the Fed’s first easing in more than four years at the September meeting. They have also forecast cuts of around 100 basis points through the end of 2024.
Data on Friday showed that the commodity price index personal consumption expenditure (PCE) rose 0.2% last month, in line with expectations, after an unrevised 0.1% advance in June. In the 12 months through July, the PCE price index rose 2.5%, matching June’s increase. consumer spending also rose 0.5% last month after expanding 0.3% in June.
“Obviously, we’re going to have a rate cut, and I think whether it’s going to be 25% or 50%, that’s still debatable and it’s all going to depend on next week’s jobs data,” he said. Peter Cardillo, Chief Market Economist of Spartan Capital Securities in New York.
“I see three rate cuts and I see the possibility of a half-percentage point cut in September, depending on the employment data. If not, it will be a 25 basis point cut in September and then a 50 basis point cut in December,” he said.
Source: Ambito
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